Quarterly financial report for the quarter ended December 31, 2025
Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and programs
- Highlights of fiscal quarter results
- Significant changes to authorities
- Significant changes to cumulative budgetary expenditures by standard object and by authorities
- Significant changes to quarterly budgetary expenditures by standard object and by authorities
- Risks and uncertainties
- Significant changes in operations, personnel and programs
Statement outlining results, risks and significant changes in operations, personnel and programs
Introduction
This report for the quarter ended December 31, 2025 has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The report has not been subject to an external audit or review and should be read in conjunction with Global Affairs Canada’s (GAC) Main Estimates and Supplementary Estimates for the current fiscal year.
Basis of presentation
This quarterly report has been prepared using an expenditure basis of accounting. The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.
The accompanying Statement of Authorities includes GAC's spending authorities granted by Parliament, and those used by GAC, consistent with the Main Estimates and Supplementary Estimates (as applicable) for the current fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.
GAC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament are on an expenditure basis.
Highlights of fiscal quarter results
1. Significant changes to authorities
The following table shows the total budget available for use by GAC, which includes authorities available for use and granted by Parliament as at December 31.
| (in thousands of dollars) | Total available for use for the year ending March 31, 2026 | Total available for use for the year ending March 31, 2025 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Authorities | ||||
| Vote 1 - Operating expenditures | 2,555,939 | 2,365,396 | 190,543 | 8% |
| Vote 5 - Capital expenditures | 371,342 | 212,926 | 158,416 | 74% |
| Vote 10 - Grants and contributions | 6,006,360 | 6,148,344 | (141,984) | (2%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 121,350 | 112,971 | 8,379 | 7% |
| Statutory authorities | ||||
| Payments to international financial institutions | 250,404 | 249,405 | 999 | 0% |
| Contributions to employee benefit plans | 157,800 | 138,402 | 19,398 | 14% |
| Debt forgiveness to Pakistan | - | 22,187 | (22,187) | (100%) |
| Other statutory authorities | 3,000 | 3,616 | (616) | (17%) |
| Total budgetary authorities | 9,466,195 | 9,253,247 | 212,948 | 2% |
i. Authorities for operating expenditures
Authorities for operating expenditures increased by $191 million or 8%, which is mainly explained by:
- Increase of $100 million for the funding of the presidency of the 2025 G7 Summit in Canada;
- Increase of $67 million related to:
- inflation on overseas operations and foreign service allowances;
- foreign exchange fluctuations on operating expenditures and locally-engaged staff salaries at missions abroad; and
- compensation adjustments for locally engaged staff salaries and benefits;
- Increase of $12 million due to Operating Budget Carry Forward amount received in 2025-26;
- Increase of $10 million due to a transfer from Fisheries and Oceans Canada to GAC for the Great Lakes Fishery Commission;
- Remaining increase of $2 million is due to increases and decreases of lesser value.
ii. Authorities for capital expenditures
Authorities for capital expenditures increased by $158 million or 74%, which is mainly explained by:
- Increase of $68 million due to the reinvestment of revenues from the sale or transfer of real property;
- Increase of $47 million from the reprofiling of Duty of Care funding;
- Increase of $25 million due to Capital Budget Carry Forward amount received in 2025-26;
- Increase of $17 million due to internal reallocation of resources for the Grants and Contributions Transformation Initiative;
- Remaining increase of $1 million is due to increases and decreases of lesser value.
iii. Authorities for grants and contributions
Authorities for grants and contributions decreased by $142 million or 2%, which is mainly explained by:
- Decrease of $100 million in funding for Canada's International Biodiversity Program;
- Decrease of $46 million in funding for Canada’s Middle East Strategy;
- Decrease of $44 million in funding to advance humanitarian demining and promote cyber resilience in Ukraine; and
- The offsetting increase of $48 million is mostly explained by increased funding for Canada's International Climate Finance Program.
iv. Statutory Authorities for Debt Forgiveness to Pakistan
The loan to the Government of Pakistan was fully forgiven in the previous fiscal year.
2. Significant changes to cumulative budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the first nine months of the fiscal year and their comparison for the same period last fiscal year.
| (in thousands of dollars) | April to December 2025-26 | April to December 2024-25 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 1,327,946 | 1,204,701 | 123,245 | 10% |
| Professional and special services | 306,150 | 262,015 | 44,135 | 17% |
| Rentals | 208,632 | 191,496 | 17,136 | 9% |
| Transportation and communications | 114,389 | 141,251 | (26,862) | (19%) |
| Information | 21,710 | 13,345 | 8,365 | 63% |
| Repairs and maintenance | 20,939 | 18,601 | 2,338 | 13% |
| Utilities, materials and supplies | 31,587 | 28,812 | 2,775 | 10% |
| Acquisition of land, buildings and works | 33,337 | 26,312 | 7,025 | 27% |
| Acquisition of machinery and equipment | 31,373 | 34,031 | (2,658) | (8%) |
| Other | 18,639 | 7,078 | 11,561 | 163% |
| Total Operating and Acquisition | 2,114,702 | 1,927,642 | 187,060 | 10% |
| Transfer payments | 3,444,688 | 3,429,699 | 14,989 | 0% |
| Total Gross Budgetary Expenditures | 5,559,390 | 5,357,341 | 202,049 | 4% |
| Revenue credited to the vote | 65,346 | 54,523 | 10,823 | 20% |
| Total net budgetary expenditures | 5,494,044 | 5,302,818 | 191,226 | 4% |
| Authorities | ||||
| Vote 1 - Operating expenditures | 1,731,801 | 1,600,279 | 131,522 | 8% |
| Vote 5 - Capital expenditures | 137,530 | 113,830 | 23,700 | 21% |
| Vote 10 - Grants and contributions | 3,040,683 | 3,186,721 | (146,038) | (5%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 61,511 | 55,710 | 5,801 | 10% |
| Statutory authorities | ||||
| Payments to international financial institutions | 249,532 | 242,783 | 6,749 | 3% |
| Payments to FinDev Canada | 154,000 | - | 154,000 | 100% |
| Contributions to employee benefit plans | 118,326 | 102,777 | 15,549 | 15% |
| Other statutory authorities | 661 | 718 | (57) | (8%) |
| Total budgetary authorities | 5,494,044 | 5,302,818 | 191,226 | 4% |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $187 million or 10%, which is mainly explained by:
- Increase of $123 million in salaries and employee benefits due to:
- Regular annual salary increases and changes in position steps of Canada-based staff; and
- Regular annual salary increases for locally-engaged staff, which are affected by changes to inflation and foreign exchange.
- Increase of $44 million in professional and special services due to:
- Engineering and construction services for renovations completed in certain missions abroad and for the 2025 G7 Summit in Canada;
- Increased hospitality expenditures in Canada as part of the 2025 G7 Summit; and
- Increased protection services at missions abroad;
- Increase of $8 million for expenditures related to audio-visual and media services for the 2025 G7 Summit and the Canada-America Trade in 2025-26;
- Increase of $7 million in acquisition of land, buildings and works, which is mainly due to the construction of a new high commission abroad;
- Increase of $12 million in other expenditures, which is due to:
- New settlements for damages and other claims against the Crown; and
- Contribution to the Great Lakes Fishery Commission.
- Decrease of $27 million in transportation and communications due to:
- Decrease of charter flights paid for the evacuation of Canadians abroad due to overseas conflicts and political instability; and
- Decrease in data communication services from previous year.
- The remaining increase of $20 million is due to increases and decreases of lesser value.
3. Significant changes to quarterly budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the quarter ended December 31, 2025 and the comparison for the same period last fiscal year.
| (in thousands of dollars) | October to December 2025-26 | October to December 2024-25 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 442,796 | 388,007 | 54,789 | 14% |
| Professional and special services | 133,742 | 117,886 | 15,856 | 13% |
| Rentals | 60,243 | 62,355 | (2,112) | (3%) |
| Transportation and communications | 40,268 | 56,429 | (16,161) | (29%) |
| Information | 6,993 | 5,732 | 1,261 | 22% |
| Repair and maintenance | 7,176 | 7,769 | (593) | (8%) |
| Utilities, materials and supplies | 11,359 | 11,096 | 263 | 2% |
| Acquisition of land, buildings and works | 16,422 | 11,076 | 5,346 | 48% |
| Acquisition of machinery and equipment | 14,547 | 16,023 | (1,476) | (9%) |
| Other | 429 | 156 | 273 | 175% |
| Total Operating and Acquisition | 733,975 | 676,529 | 57,446 | 8% |
| Transfer payments | 983,105 | 1,552,999 | (569,894) | (37%) |
| Total Gross Budgetary Expenditures | 1,717,080 | 2,229,528 | (512,448) | (23%) |
| Revenue credited to the vote | 2,522 | 3,345 | (823) | (25%) |
| Total net budgetary expenditures | 1,714,558 | 2,226,183 | (511,625) | (23%) |
| Authorities | ||||
| Vote 1 - Operating expenditures | 595,919 | 568,500 | 27,419 | 5% |
| Vote 5 - Capital expenditures | 75,063 | 51,726 | 23,337 | 45% |
| Vote 10 - Grants and contributions | 957,952 | 1,553,023 | (595,071) | (38%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 21,126 | 18,463 | 2,663 | 14% |
| Statutory authorities | ||||
| Payments to international financial institutions | 25,000 | - | 25,000 | 100% |
| Payments to FinDev Canada | - | - | - | 0% |
| Contributions to employee benefit plans | 39,249 | 34,121 | 5,128 | 15% |
| Other statutory authorities | 249 | 350 | (101) | (29%) |
| Total budgetary authorities | 1,714,558 | 2,226,183 | (511,625) | (23%) |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $57 million or 8%, which is mainly explained by:
- Increase of $55 million in salaries and employee benefits due to:
- Regular annual salary increases and changes in position steps of Canada-based staff; and
- Regular annual salary increases for locally-engaged staff, which are affected by changes to inflation and foreign exchange.
- Increase of $16 million in professional and special services due to:
- Engineering and construction services for renovations completed in certain missions abroad and for the 2025 G7 Summit in Canada;
- Increased hospitality expenditures in Canada as part of the 2025 G7 Summit.
- Increase of $5 million in acquisition of land, buildings and works due to the construction of a new high commission abroad.
- Decrease of $16 million in transportation and communications due to:
- Decrease of charter flights paid for the evacuation of Canadians abroad due to overseas conflicts and political instability; and
- Decrease in data communication services from previous year.
- The remaining decrease of $3 million is due to decreases and increases of lesser value.
ii. Transfer payments
Transfer payments decreased by $570 million or 37%, which is mainly explained by:
- Decrease of $564 million due to timing differences in payments to the United Nations and related organizations for international development assistance. Especially, for a significant payment to the Global Fund to Fight AIDS, Tuberculosis and Malaria, which occurred in the second quarter of this year compared to the third quarter of last year;
- Decrease of $82 million due to timing differences in payments to international financial institutions. Especially, for a significant payment to the World Bank, which hasn’t occurred in the current year yet, compared to the third quarter of previous year;
- Increase of $90 million due to an unconditionally repayable contribution paid in the third quarter this year compared to the fourth quarter last year; and
- Remaining decrease of $14 million is due to decreases and increases of lesser value.
4. Risks and uncertainties
As a federal department delivering a complex mandate in a rapidly changing international environment, GAC is influenced by many factors. These factors include political and security conditions, economic controls, global inflation, social contexts and shifting global trends, including geopolitical dynamics and climate risks.
At any time, the aforementioned factors could affect GAC’s operations, whether domestically or abroad, with the potential for significant impacts including on the safety and security of its personnel at missions. As such, effective risk management is critical to GAC’s ability to deliver results for Canadians. On the operational level, GAC regularly undertakes reviews to examine operational risks and assess the progress and effectiveness of ongoing responses. Risks are managed diligently by program leads, and an agile approach is used to avoid undue risk to program integrity. On the strategic front, the top risks facing GAC are established bi-annually in the Enterprise Risk Profile (ERP). In lieu of launching a new corporate risk cycle, the current ERP has been exceptionally refreshed and extended by one year so that it will cover fiscal years 2024-2027. This decision reflects the current context of significant and competing demands, including the ongoing Comprehensive Expenditure Review (CER) and efforts to advance mandate letter priorities. GAC also reviews the implementation of responses to the top strategic risks on a semi-annual basis by having risk leads assess progress and report to senior management. In addition, in support of effective risk management, GAC’s internal audit function provides independent assurance and advisory services to assess the adequacy of risk responses and internal controls. These insights help inform senior management’s understanding of key risks and support continuous improvement in risk mitigation strategies.
The GAC Enterprise Risk Management Strategy guides departmental officials in managing risks that affect strategic plans and priorities. With this approach, GAC’s Strategic Risk Landscape and the Enterprise Risk Profile serve to identify unique pressures associated with GAC’s operating environment. The current key strategic risks that are tracked closely by senior management and receive extra support for their mitigation are around: Workload, constant change and discrimination; resource allocation related to Policy, Programs and Service Delivery; Staffing and retention related to HR and workforce capacity; Infrastructure and Cyber/Digital security and resilience; and Sustainability of real property assets abroad. Work on these risks is also incorporated into GAC’s governance committee agendas to ensure comprehensive, department-wide engagement on key corporate priorities in support of a more agile and responsive department. Furthermore, GAC is implementing the Risk and Compliance Process, which is a new whole-of-government requirement by Treasury Board Secretariat. In addition to its corporate risks, GAC conducts self-assessments of risk across 11 defined Areas of Focus to support deputy heads in identifying where risks exist as well as related mitigation measures.
GAC continues to be pragmatic and versatile in its management of risks and uncertainties associated with resources. GAC has a five-year investment and procurement plan, which includes a comprehensive strategy for how risks will be managed throughout the timeframe. To this effect, GAC is preparing to implement measures to address the reductions announced in Budget 2025, beginning in fiscal year 2026-2027. These measures include refocusing advocacy and diplomacy efforts, implementing targeted reforms within the Trade and Investment portfolio, aligning Development, Peace, and Security programming with strategic priorities, and realizing efficiencies across Canada’s mission network. GAC recognizes that workforce adjustment measures will impact how GAC manages its corporate risks. GAC is actively reassessing investment and workplan priorities on several fronts, which includes risk identification and mitigation planning.
GAC has applied a range of measures to manage risks associated with fraud, such as training on awareness and detection. The risk of fraud is also considered in all audit engagements. GAC is also finalizing a departmental Fraud Risk Management Maturity Assessment. GAC continues to assess, on a risk basis, its internal controls over financial reporting at headquarters and at missions and reports on its internal controls over financial management, as per the requirements of the Treasury Board Policy on financial management. On the transfer payment programming side, GAC considers both fiduciary and non-fiduciary risks to guide the allocation of grants and contributions, as well as its recipient organizations audit planning. Additionally, when appropriate, GAC continues to strengthen the financial management capacity of partner organizations.
5. Significant changes in operations, personnel and programs
During the quarter, changes occurred in relation to CER to ensure that spending is responsible and cost-effective and delivers results for Canadians.
Approved, as required by the TB Policy on Financial Management:
David Morrison
Deputy Minister of Foreign Affairs
Shirley Carruthers
Assistant Deputy Minister and Chief Financial Officer
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